Software Companies: Old vs. New, Round 1

How well do you think the traditional software vendors of the world (Microsoft, IBM, etc.) have done at taming the new guys (Google, Salesforce.com, etc.) in the software space?

(*By the way, a quick word on how I’m classifying new vs. old. Microsoft was founded in 1975 and IBM was incorporated in 1911; Google and Salesforce.com IPO were both in 2004).

Microsoft seems to think it has done just fine with the transition, as made clear by its CEO, Steve Ballmer, last week in a meeting with financial analysts in Redmond, Wash. He said the company’s new strategy of “software plus services” (still making a clear distinction from Software as a Service, or SaaS) will be the future for businesses.

Microsoft partners seems to find that approach just peachy, as this Computerworld article shows, because it’ll allow them to wean themselves off the on-premise model that has been the standard for so long.

Meanwhile, Salesforce.com and other Microsoft critics dismissed the company’s entrance into the hosted CRM space as too little, too late.

Microsoft responded to salesforce.com by saying that ‘talk is cheap.’

Bill Gates, for his part, is still pretty dismissive of Google in the enteprise software space. In this Times article (a great read about his evolving role and his planned departure), he expressed confusion over how Google could be considered competitive if the company makes all its money from ads (its bread and butter product) and very little from software.

But as Bernard Golden aptly points out in his recent blog post, didn’t Gates do the same thing when he offered IE as a free option to Netscape (bundled in with Microsoft’s staple product, Windows)?

IBM seems to be evolving a little more quietly. In a recent post, I noted how they’ve altered their software strategy and are offering the same types of Web 2.0-inspired software as the new vendors but doing so in a way they claim to be more business-friendly for CIOs and IT managers. It has also had a SaaS initiative with its business partners.

And IBM and Microsoft vs. Google and Salesforce.com is just an example of a relatively new face-off in the software space. These types of match-ups are going to continue

to happen as businesses become more predisposed toward as web services model.

As a customer, observer or reader, I’d enjoy hearing your take on this for some research I’m doing. Send me a note if you get a chance or post a comment below.